The
first session of the Ad Hoc Working Group on Further Commitments
for Annex I Parties under the Kyoto Protocol (AWG) began on Wednesday,
17 May. It is scheduled to continue in parallel with the
24th sessions of the UNFCCC Subsidiary Bodies (SB 24) until 25 May
(SB 24 is scheduled for 18-26 May). On the AWG’s first day, parties
elected the Chair and Vice-Chair and provided initial views on the AWG’s
future work plan.

OPENING OF THE AWG

On
Wednesday afternoon, COP/MOP 1 Vice-President Enele Sopoaga (Tuvalu)
welcomed delegates and noted that COP/MOP 1 President Rona Ambrose
(Canada) was unable to attend. He drew attention to COP/MOP 1’s Decision
1/CMP.1, which he said initiated a process to consider further
commitments by Annex I parties for the post-2012 period, in accordance
with Kyoto Protocol Article 3.9. He explained that the AWG was a new
subsidiary body designed to facilitate this process, and that it would
be an open-ended ad hoc group that would report to each session
of the COP/MOP.

Vice-President Sopoaga noted that consultations had been held on
candidates for the AWG bureau, and proposed Michael Zammit Cutajar
(Malta) as Chair and Luiz Alberto Figueiredo Machado (Brazil) as
Vice-Chair. Parties elected both candidates by acclamation.
Consultations on a rapporteur will continue.

AWG
Chair Zammit Cutajar said the AWG is important because it presents an
opportunity to Annex I parties to demonstrate leadership and an occasion
to give a signal of continuity to the carbon markets. He stressed the
significance of the AWG as part of a larger process both inside and
outside the UNFCCC, noting that the AWG by itself does not have the
mandate to open or encourage contributions from non-Annex I parties or
Protocol non-signatories such as the US. Calling for a harmonious fit
with other parts of the process of considering the future of the climate
regime, he expressed hope that the work would proceed with momentum,
motivation and ambition.

Richard Kinley, Officer-in-Charge of the
UNFCCC Secretariat, emphasized the potential of market forces and
the need for long-term and cohesive policies to fully unleash their
power.

Parties adopted the agenda, as proposed (FCCC/KP/AWG/2006/1). Chair
Zammit Cutajar suggested starting in plenary with country statements on
the AWG’s future work, and then allowing participants to respond.
Discussions would then be taken up in contact groups and informal
consultations. Parties agreed to this proposed organization of work.

GENERAL STATEMENTS: Many parties commented on the AWG’s future work
plan, focusing on such issues as the nature and strength of the second
commitment period, the timescale/length of the next commitment period
and other matters relating to timing, continuity between the first and
second commitment periods, links with other processes such as Protocol
Article 9 (review of the Protocol), key topics that should be discussed
by the AWG, and the scientific basis of the AWG’s work. Several parties
highlighted the urgent need to move forward on future commitments under
Article 3.9, and that there should be no time gap between the end of the
first commitment period and start of the second.

Future commitments: On the nature of future commitments, South
Africa, for the G-77/CHINA, said Annex I commitments for the second
commitment period should be “substantially stricter” and stressed the
need for information on Annex I countries’ performance toward meeting
their targets for 2008-2012. Nigeria, for the AFRICAN GROUP, lamented
the low level of commitments from some Annex I countries, including the
lack of resources for capacity building and technology transfer. With
INDIA, he called for stricter commitments for the second commitment
period. INDIA added that more extensive use of the CDM would help to
facilitate equitable burden sharing among Annex I countries through
lower compliance costs and would encourage Annex I parties to adopt
deeper reduction targets, while contributing to adaptation efforts
through the 2% levy on CDM projects. The EU said commitments must be
clearly defined and fair. He restated the EU’s goal of restricting the
temperature increase to a maximum of 2oC, and highlighted how
the European Emissions Trading Scheme had introduced the price of carbon
to the private sector. Tuvalu, speaking for AOSIS, stressed the need for
significant contributions from all parties and, with BOLIVIA, said the 2oC
target is not ambitious enough. He highlighted historical emissions and
the impacts of insufficient action. EGYPT underscored the principle of
common but differentiated responsibilities. SINGAPORE stressed that AWG
specifically addresses Annex I commitments and drew attention to the
importance of market mechanisms.

CLIMATE ACTION NETWORK (CAN) EUROPE, speaking for environmental NGOs (ENGOs),
stressed the importance of Annex I countries taking the lead, while
adding that all parties need to play their part. He stressed the need
for new market mechanisms for developing countries, which could include
sectoral approaches.

Length of the second commitment period: CHINA said the second
commitment period could be longer and offer more flexibility, and
appreciated the EU’s proposal for 15-30% reductions for developed
countries. ALGERIA, with SAUDI ARABIA, said the second commitment period
should extend until 2025-2050, and should contain significant
commitments. JAPAN raised various questions, including how long the
second commitment period should last, its modalities, and who should be
included.

ENGOs
said that although a five-year commitment period might be short, there
is a need for sufficient control to ensure political accountability and
flexibility. The UNION OF INDUSTRIAL AND EMPLOYERS’ CONFEDERATIONS OF
EUROPE, on behalf of business and industry NGOs (BINGOs), urged a
long-term framework with wide participation.

Links with other processes: The RUSSIAN FEDERATION, CANADA, NORWAY
and SWITZERLAND noted the linkages between this process and the one for
Article 9, while the G-77/CHINA, ALGERIA, SAUDI ARABIA, EGYPT and INDIA
suggested that each process was independent. CHINA stressed that the AWG
has a clear mandate and warned against complicating its task. ICELAND
emphasized that the process cannot be isolated from other developments
within the UNFCCC and elsewhere. NEW ZEALAND cited convergence with
other climate change initiatives, including the UNFCCC dialogue. MEXICO
observed that although there is no legal linkage between Article 3.9 and
other articles, there are political and functional connections.

Topics for the AWG’s consideration: NORWAY mentioned the second
commitment period’s “ambition level” and an analytical basis for
differentiating commitments. He said LULUCF issues, bunker fuels and
flexible mechanisms should also be considered. NEW ZEALAND agreed with
the proposal to discuss LULUCF, and suggested a discussion on the
strengths and weaknesses of the Protocol. He supported starting with an
analysis and assessment phase that would include emissions trends of all
Convention parties.

BRAZIL
characterized the AWG’s work as a straightforward task that should
simply lead to deeper commitments by Annex I parties. He suggested that
the group should complete its work by 2008 or 2009, and said that
discussions should not lead to opening or reopening previous agreements
under the UNFCCC or the Protocol. ENGOs agreed that the process should
be concluded by 2008, supported including LULUCF and bunker fuels, and
said the process should not be tied to the electoral cycle of the US.

REPUBLIC OF KOREA said Annex I countries should take the lead in
disseminating technology and, with MEXICO, proposed starting with a
stocktaking exercise. SWITZERLAND suggested establishing a flexible plan
of work to be completed in 2007 and using information contained in
national reports. He said substantive issues should include distribution
of emission reductions among parties and sectors. The EU said the work
plan should have the flexibility to accommodate issues that come up at a
later stage.

CANADA
said future action should allow parties to choose the best combination
of results-oriented actions that lead to real reductions in greenhouse
gas emissions. She highlighted a sectoral approach, transparency and
information sharing. ICELAND mentioned sectoral targets, including
sectoral benchmarking. The RUSSIAN FEDERATION highlighted the issue of
voluntary commitments, and Chair Zammit Cutajar confirmed that informal
negotiations on voluntary commitments would be held, with details on the
negotiations pending.

Scientific basis: Several parties, including the EU, AOSIS, RUSSIAN
FEDERATION and CANADA stressed the need for a scientific basis to the
AWGï¿½s work. BINGOs called for a framework that stimulates scientific
research and encourages public-private partnerships and voluntary
actions.

Conclusion: Summarizing the first round of discussions, Chair Zammit
Cutajar identified a number of themes that had emerged, including the
speed and timeline for the process, the complexity or simplicity of the
task ahead, possible linkages with other processes, burden-sharing and
allocation, costs, architectural issues, sectoral approaches, bunker
fuels, methodological matters and the AWGï¿½s working methodology. He
indicated that informal consultations on the AWGï¿½s future work would
begin on Thursday evening, 18 May. He said the focus of these
consultations would be the issues raised by parties, and that
consideration could be given to what work should and should not be
undertaken by the AWG. The AWG plenary will reconvene on Monday
afternoon, 22 May.

EXPERT MEETING ON ECONOMIC DIVERSIFICATION

In
addition to the AWG, a number of experts also met from 16-17 May in a
closed meeting on economic diversification. The meeting was held as a
result of Decision 1/CP.10 taken at COP 10 in December 2004, which
outlines the Buenos Aires programme of work on adaptation and response
measures, and requests the secretariat to organize a meeting prior to
SBI 24 ï¿½to consider how economic diversification might be integrated
into and support sustainable development strategies.ï¿½

The
meeting involved contributions from representatives of the International
Institute for Sustainable Development, International Energy Agency,
University College London and various other organizations, as well as
government officials from Saudi Arabia, Australia, the EU and others.
Delegates engaged in discussions on possible technical support, foreign
and domestic investments and partnerships to support economic
diversification, and consideration of lessons learned (more information:
http://unfccc.int/meetings/workshops/other_meetings/items/3639.php).

IN THE CORRIDORS

UNFCCC
Executive Secretaries old and new were being discussed in the corridors
on Wednesday. The first topic of conversation was the late start of the
AWGï¿½s first meeting, which was pushed back from 10:00 am to 1:00 pm. The
delay was due to disputes over the leadership of this new group that
will deal with the sensitive issue of post-2012 commitments under
Protocol Article 3.9. Apparently, there was some North-South/regional
jostling over positions and also over the length of time the bureau
would serve, with some preferring a one-year term over the two years
served by SBI and SBSTA chairs. The consultations resulted in former
UNFCCC Executive Secretary Michael Zammit Cutajar ï¿½ a highly respected
figure in the climate process ï¿½ taking the chair, and Brazilï¿½s Luiz
Alberto Figueiredo Machado accepting the Vice-Chairï¿½s post. However,
disputes apparently remain over whether the rapporteurï¿½s position will
go to a developing country or an economy-in-transition.

There
was also speculation over the next UNFCCC Executive Secretary, with some
delegates noting that the UNFCCC Bureau had not yet been presented with
a name by the ï¿½powers that beï¿½ at UN headquarters in New York, although
a shortlist was announced more than two months ago. However, one insider
expected a decision ï¿½within weeks rather than months.ï¿½

Finally, early rumors about the possible venue of COP 13 and COP/MOP 3
in 2007 were already swirling, even though a decision is not due until
COP 12 later this year. With 2007 being Asia-Pacificï¿½s turn to host the
meeting, there was speculation that one south-east Asian nation might be
interested. ï¿½I wonï¿½t say who, but itï¿½s north of Malaysia and begins with
the letter ï¿½Tï¿½ï¿½.oh, and the capital is Bangkok,ï¿½ added one rather
transparent participant.

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